Correlation Between Alfa Financial and LBG Media
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and LBG Media at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alfa Financial and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and LBG Media PLC, you can compare the effects of market volatilities on Alfa Financial and LBG Media and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alfa Financial with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and LBG Media.
Diversification Opportunities for Alfa Financial and LBG Media
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alfa and LBG is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC and Alfa Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alfa Financial Software are associated (or correlated) with LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Alfa Financial i.e., Alfa Financial and LBG Media go up and down completely randomly.
Pair Corralation between Alfa Financial and LBG Media
Assuming the 90 days trading horizon Alfa Financial is expected to generate 1.48 times less return on investment than LBG Media. But when comparing it to its historical volatility, Alfa Financial Software is 1.16 times less risky than LBG Media. It trades about 0.05 of its potential returns per unit of risk. LBG Media PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,750 in LBG Media PLC on September 3, 2024 and sell it today you would earn a total of 5,950 from holding LBG Media PLC or generate 88.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. LBG Media PLC
Performance |
| Timeline |
| Alfa Financial Software |
| LBG Media PLC |
Alfa Financial and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and LBG Media
The main advantage of trading using opposite Alfa Financial and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, LBG Media can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LBG Media will offset losses from the drop in LBG Media's long position.| Alfa Financial vs. Samsung Electronics Co | Alfa Financial vs. Samsung Electronics Co | Alfa Financial vs. Hyundai Motor | Alfa Financial vs. Toyota Motor Corp |
| LBG Media vs. Intuitive Investments Group | LBG Media vs. European Metals Holdings | LBG Media vs. Athelney Trust plc | LBG Media vs. Invesco Health Care |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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